Algerian woes hit Orascom boss’ risk appetite

Orascom Telecom’s Naguib Sawiris, who built one of Africa’s largest fortunes going into countries like Iraq and North Korea, said problems in Algeria had shifted his interest to less risky markets.

Sawiris, 56, told Reuters the $6.6 billion tie-up of his Weather Investments with Vimpelcom could open the way to expansion in eastern Europe, but that would depend on discussions with other shareholders in the expanded firm.

The fate of Orascom’s Algerian unit has yet to be determined but Vimpelcom said it wanted to keep Djezzy. The unit has been at the centre of a row with Algiers over back taxes and the state’s claim it has the right of first refusal to buy it.

“I would say that I would be less inclined today to invest in similar (places), let’s say, in countries where the situation could … happen again,” Sawiris said in an interview late on Monday, adding he was not a “young man anymore, you know”.

Starting last year, Algiers served Orascom’s local unit Djezzy — the firm’s largest revenue earner — with big back-tax bills, blocked it from importing equipment and scuppered a plan to sell the unit to South Africa’s MTN .

Political lobbying, including from Egypt’s President Hosni Mubarak, apparently had little impact. Orascom agreed in May to talks to sell Djezzy to Algiers, and analysts fear the state will make a deflated offer for the lucrative unit.

“I would have rather stayed in Algeria if the circumstances or the things that were happening to us would have stopped,” Sawiris said.

Algeria denies pressuring the firm, saying its actions are based on the law.

“We’ve gone through our own government and the relations … should improve. But it seems they have not improved enough to help us solve these problems,” he said.

The Vimpelcom tie-up was announced shortly before a planned visit to Algeria by Russian President Dmitry Medvedev, a trip analysts say might help resolve the dispute.

Sawiris also owns Italian operator Wind through his holding company Weather Investments. Analysts say the tycoon’s troubles in Algeria halted his plan to merge assets into a big European operator in the model of Telenor or Deutsche Telekom .

Nevertheless, Sawiris recently pushed his interest in expanding into Eastern Europe. Orascom bid on an operator in Kosovo, and Sawiris has said his Weather vehicle may be interested in stake sales in operators in Serbia and Poland.

He said the Vimpelcom deal could help this expansion.

“We will have quite a nice firepower with this transaction based on liquid shares and the cash we’re getting, so we’ll look into all that,” Sawiris said when asked about his interest in stake sales in Eastern European operators.

The deal with Vimpelcom also marks a new direction for the billionaire by taking him out of the executive driving seat although he will have a big stake and voting rights in the enlarged firm.

“If we agree with our partners that they’d rather do it through the vehicle we are in now, like Vimpelcom, we would likely do so, and if they don’t want to do it and we want to pursue it, then we will pursue it (separately).”